The Credit Crunch Paradox

We exist in a moment of paradox.

The most promising shipowner of today owns no ships. The soundest shipping banker has no loans in his portfolio. The sharpest buyer of shipping high yield bonds hasn’t yet bought any and the slickest trader of shipping equities has 100% in cash. In short, a mythic buying opportunity is developing concurrent with a global tightening of credit and a heightened regulatory environment. This will amount to an extreme reshuffling of shipping assets and a changing roster of players in the industry.

In our opinion, depressed rates and tightened credit will create a significant barrier to entry and will accelerate consolidation. Further, it will be only those shipowners with the strongest balance sheets, or newcomers to the industry with fresh money, that will emerge as the winners by purchasing modern tonnage at distressed prices. As for the bankers, we think that those lenders who are in the position to build new portfolios, rather than play nurse to wounded ones, will be in a position to develop meaningful relationships with quality companies.

This is only an excerpt of The Credit Crunch Paradox

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